September 2026 Commentary and Economic Outlook

InfraCap expects resilient growth, falling underlying inflation and eventual rate cuts to support equities despite near-term risks from oil and the Strait of Hormuz.

• Real GDP growth is forecast at 2.5% in 2026 even if the Strait remains closed, driven by technology investment and consumer resilience; growth could reach 3% if the Strait reopens and rates fall toward 4%.
• InfraCap’s proprietary CPI-R shows 1.1% year-over-year inflation versus 2.5% for Core CPI, while its real-time shelter index is up only 0.03% compared with 3.14% for Core CPI Shelter.
• The firm argues that revised PCE data could reduce reported Core PCE from 3.3% to as low as 2.5% on September 30, because portfolio-management and software inflation are currently measured with flawed methods.
• The base-case S&P 500 target is 8,250, or 8,100 if the Strait stays closed, oil remains between $80 and $100, and the 10-year Treasury yield stays near 4.75%; a reopening, oil below $70 and a 10-year yield near 4% would raise the target to 9,000.
• The 10-year yield has risen only 25 basis points in four months while expected Fed Funds rates rose 75 basis points; real 10-year yields increased from 1.9% to 2.4%, while market-implied inflation expectations fell from 3.4% to 2.3%.

Takeaway: InfraCap expects no September Fed hike and ultimately aggressive easing if revised inflation measures confirm that underlying inflation is already near or below 2%, supporting higher equity valuations, although the outlook remains sensitive to oil prices and the Strait of Hormuz.